How weather and markets played spoilsport for agrochemical businesses in South India

India’s agriculture sector, which contributes about 18 per cent to the country’s GDP, employs around 50 per cent of the Indian workforce, and is a major player in ensuring India’s food security, is extremely vulnerable when it comes to weather as it directly impacts the availability of water which is the most crucial input for cultivation. The timing and intensity of rainfall is extremely critical for crop growth as are cyclones and winds which affect the temperature which impact germination and development.

While uneven rain patterns can damage standing crops, the recent cyclonic conditions in the southern part of India led by Cyclone Fengal have caused substantial damage to agriculture and led to huge crop losses in several districts of Tamil Nadu and Puducherry, leaving an indelible mark on the region’s farming economy and agrochemical industry. The third quarter itself remains thin for the Indian crop solutions industry, but these challenges have reshaped the business dynamics for agrochemical companies this year.

Let’s have a walk through the grim realities that have unfolded this season.

The states of Andhra Pradesh, Telangana, and Tamil Nadu usually witness high agricultural activity during the Rabi season, with paddy, cotton, and chilli being the major crops. However, delayed start to the monsoon and then extended rainfall across these states disrupted the usual cycle, delaying the sowing of these vital crops.

Cotton growers in the region were initially hopeful despite a delayed start to the monsoon. With no rain in the early season, the weed problem was manageable manually. However, when the rains did arrive, they came with a vengeance. Continuous rainfall disrupted critical herbicide applications, granular treatments, and insecticide sprays.

While the rains were a blessing in disguise for washing away some pests, they ultimately became a double-edged sword, creating significant challenges for the agrochemical sector. In paddy, farmers typically conduct at least five insecticide and pesticide sprays in a season. However, they could barely manage two sprays this year.

The chilli crop, a significant contributor to South India’s agricultural economy, has been particularly hard-hit. Frequent rainfall during the season hampered several critical sprays meant to control sucking pests. Continuous downpours washed away insects but also reduced the incidence of pests, paradoxically lowering the need for pesticide applications.

However, the bigger blow came from the market. The price of chilli—once commanding Rs. 18,000-25,000 per quintal—has plummeted to Rs. 8,000-12,000 per quintal now. This sharp decline in prices has left farmers struggling to cover even the storage and loan repayment charges. Cold storage facilities are now overflowing with unsold produce, and farmers are left with no other choice but to minimize inputs to cut losses. While chilli spraying used to occur every 5 days under normal circumstances, the interval has now doubled to every 10 days, further reducing demand for agrochemicals.

For agrochemical companies, the impact has been significant as changing weather patterns influences the demand for their products affecting their sales and profitability. These businesses rely on the consistent purchase of herbicides, insecticides, and fungicides, which are directly tied to the crop protection needs of farmers. This season, the weather’s interference with application schedules has led to reduced pest incidence and thus, a steep decline in sales.

Moreover, the economic strain on farmers due to low chilli prices has added another layer of complexity. Farmers who are barely breaking even are understandably hesitant to invest in crop protection products, further tightening the already strained market. The usual rhythm of the agrochemical business—rooted in predictable cycles of application and reapplication—has been disturbed.

While the current season has been a tough one, it also offers valuable lessons for the future. Agrochemical companies need to focus on developing solutions that are rainfast or require fewer applications to help farmers maintain productivity despite unpredictable weather. Working closely with farmers to educate them about optimizing inputs during adverse conditions can foster trust and ensure sustained demand. Partnering with government bodies or financial institutions to stabilize produce prices could indirectly benefit the agrochemical market by improving farmers’ purchasing power. Encouraging crop insurance and other safety nets can help farmers recover from losses and maintain their investments in crop protection.

The recent cyclonic conditions and market downturn in South India have undoubtedly disrupted the agricultural and agrochemical sectors. Yet, challenges often pave the way for innovation and resilience. As we navigate this tough season, it is crucial for all stakeholders—farmers, agrochemical companies, and policymakers—to work collaboratively towards sustainable solutions that can weatherproof our agriculture and stabilize farmer incomes. After all, the health of this industry is intrinsically tied to the well-being of the farmers who drive it.